What if mutual fund company goes under?
I have my retirement account with Fidelity, invested in various funds. What would happen to my money if the corporation Fidelity were to go under? Would I be able to recover my money? I don't think the particular funds are FDIC insured.
Is this a reasonable concern? After what happened with Enron, it'd be nice to know if there was a safeguard in place.
I know Fidelity is a huge company and chances of going under are almost nil - my question was more general, I've also been thinking about putting some other money in some smaller mutual fund companies of which I'm not sure of the size and financial integrity. (of course I'll check these out, but my question was a hypothetical).
- Silent KninjaLv 41 decade agoFavorite Answer
All this talk makes me hungry.
- Anonymous1 decade ago
Fidelity has over 40,000 employees and has offices in 23 countries.
If times are tough they can fire 3,000 employees and sell all their buildings.
They manage over $1,200,000,000,000.00 USD.
That's enough to buy EVERYTHING CANADA MAKES IN A YEAR.
Canada is the eight richest country in the World.
Enron is a very tiny tiny tiny company compared to Fidelity.
Fidelity sells more than $10 Billion a year and they make more than $1 Billion a year.
Fidelity is currently the 248 largest company in the United States of America by Sales.
However, in their industry they are the 13
There are no safeguards in place to protect this company.
If you are worried about this then buy the magazine Fortune 500 once each year.
When the Fortune 500 list is published and check how much money they made that year.
If someday in the future their profits are reduced to $0.00 then sell your Mutual Funds and buy similar Mutual Funds from bigger companies.
You could also invest up to 25% of your Money in Fidelity and the rest in three bigger companies.
It is unlikely four companies will go under at the same time.
In the worst case scenario you only lose 25% of your money.
By the way, Fidelity Mutual Funds are not good for you.
I can choose Mutual Funds with better returns and less risk for you for FREE.
I am a Portfolio Manager with over a decade of experience in the Stock Market.
- Anonymous1 decade ago
Well, Enron's pension were largely based on the company's own stock-which is an option for 401ks but should not be 100% of your retirement fund. Their stock at the time was so attractive that people didn't pay attention and just stuck with it. This is bad investing.
If Fidelity went bust there would be a whole other level of chaos elsewhere, meaning that it would not be problem inherent to Fidelity but the world economy on a whole. This is purely skeptical theory.
For this to happen wouldn't. There would be protection efforts all the way. And if there wasn't, that type of failure would be beyond government; a chaotic WW3 end of the world scenario.
You'll be fine.
- NCLv 71 decade ago
Fidelity is not Enron in that it is a federally registered investment advisor, annually audited by the SEC and required to have business continuity plans to ensure that client accounts survive the demise of the company.
As is the case with any fund management company, Fidelity's assets and liabilities are fully separated from those of the funds it manages. The risk that you do have is that Fidelity's fund managers will make bad investment decisions on your behalf.
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- gregory_dittmanLv 71 decade ago
It depends on the level of fraud involved. At any time managers can really screw over their customer like major mutual funds and brokerage companies did in Australia and those companies still exist.
If Fidelity were to go under, your mutual fund will probably be sold to another brokerage firm because it would be the best way for them to legally make money. It's information that is being sold. You will probably be told your mutual fund will be merged with another mutual fund and new contact information will be given to you.
- Anonymous1 decade ago
If Fidelity "go under" there is no chance you will recover anything, because if Fidelity "go under", the whole country will go down with them! (Which will, of course, precipitate international economic collapse...)
The US government would never let a company like Fidelity fail...there would be chaos on the streets!
- 1 decade ago
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